photo: Todd Woody

In The New York Times on Thursday, I write about the solar industry’s dismay over the rent and other fees the United States government will charge developers to build big solar power plants on federal land in the desert Southwest:

The nation’s biggest landlord, the United States government, has set the rent it will charge developers who build solar power plants on federal land, and some prospective tenants are not happy.

Solar developers will actually pay two fees – the lease for the land along with what the Bureau of Land Management calls a “megawatt capacity fee” based on how much electricity a project generates.

“Since we don’t have authority to collect royalties for wind and solar projects, we had to come up with a methodology to convert that electrical generation into an upfront rent payment,” Ray Brady, manager of the bureau’s renewable energy team, said in an interview.

But potential developers see a disparity. “The proposed B.L.M. rental fees are in many cases two times higher than market rates for private land,” Monique Hanis, a spokeswoman for the Solar Energy Industries Association, said in an e-mail message. “The B.L.M. must collect ‘fair market value’ from developers, but this seems to go beyond that threshold.”

That methodology is a work in progress as the agency tries to adapt decades-old formulas designed for oil and gas leasing and mineral extraction to renewable energy production.

Some 23 million acres of federal property are suitable for large-scale solar development, according to the bureau, and the agency has received more than 200 lease applications from developers who covet hot and sunny desert real estate in the Southwest.

Solar farms typically require vast swaths of land, meaning the lease fees can be considerable depending on a project’s location and local property values. The Bureau of Land Management’s solar rents range from $15.70 an acre in Hidalgo County, N.M., to $313.88 an acre in Riverside County, Calif.

For instance, BrightSource Energy will pay the government about $427,000 a year in rent for its 3,400-acre Ivanpah Solar Electric Generating System in San Bernardino, Calif., now undergoing licensing. The company, based in Oakland, Calif., will also pay an annual megawatt capacity fee of $2.6 million for the 392-megawatt solar thermal power plant. Fees over the 25-year life of the contracts that BrightSource has signed with California utilities would total about $76 million.

In neighboring Riverside County, First Solar, a solar module maker and developer based in Tempe, Ariz., plans to build a 550-megawatt photovoltaic farm on 4,410 acres of federal land. Lease and capacity fees for the Desert Sunlight project will total about $4.3 million a year.

The agency is charging different capacity fees for different solar technologies. Photovoltaic power plants, which deploy solar panels like those found on residential rooftops, are assessed $5,256 a megawatt.

Developers of more efficient solar thermal power plant, which uses mirrors to heat liquids to generate steam that drives a turbine, pay $6,570 a megawatt. The same rate is charged for concentrating photovoltaic farms that use mirrors to focus the sun on a highly efficient solar cell.

If either technology uses energy storage systems to produce electricity when the sun doesn’t shine, the fee jumps to $7,884 a megawatt. The fees will be phased in over the first five years of a power plant’s operation.

Some developers and environmentalists argue that such a fee structure penalizes technologies that are more efficient and thus use less land.

“This is an unfortunate way of emphasizing one technology over another,” said Bobby McEnaney, a land program expert at the Natural Resources Defense Council.

In a sign that solar industry and its political allies are starting to flex some real power, the federal government reversed course Wednesday and announced it would continue to accept new applications to build solar power plants on government land while developing an environmental policy for assessing the projects.

Green Wombat had been off the grid on holiday the past week and so was surprised to log back on to find the mainstream media and blogosphere ablaze over the Bush administration’s supposed move last month to halt big solar power plant projects in California’s Mojave Desert and elsewhere.

“Citing Need for Assessments, U.S. Freezes Solar Energy Projects,” read the headline on The New York Times story about the Bureau of Land Management’s decision to temporarily stop accepting new applications for solar power plants until it studies the environmental impact of industrializing the desert. “How to strangle an industry,” proclaimed Grist, a respected green policy blog about the move. Solar executives and politicians meanwhile slammed the BLM and predicted dark days for renewable energy. “This could completely stunt the growth of the industry,” the Times quoted Ausra exec Holly Gordon.

Problem is, those stories were dead wrong: The feds did not freeze a single solar power plant project currently under review. What was left unsaid, or just briefly mentioned, was the fact that the BLM is continuing to process the 125 solar power plant proposals already in the hopper. Those lease applications cover nearly a million acres for solar power plants that would produce 60 gigawatts of electricity if all are built, which they won’t be. Those projects alone will keep companies like Ausra, BrightSource Energy, FPL (FPL) and PG&E (PCG) busy for years to come, moratorium or not.

“We don’t even like to call it a moratorium,” says Alan Stein, a deputy district manager for the BLM in California. Stein called me on my mobile just as I was about to step into a kayak at Elkhorn Slough near Big Sur. I had spent several months talking to Stein and other BLM officials while criss-crossing the Mojave with solar energy executives for a forthcoming Fortune story and he seemed taken aback by the tone of the media coverage.

But the higher-ups in Washington got the message. “We heard the concerns expressed during the scoping period about waiting to consider new applications, and we are taking action,” said BLM Director James Caswell in a statement. “By continuing to accept and process new applications for solar energy projects, we will aggressively help meet growing interest in renewable energy sources while ensuring environmental protections.”

The head of the solar industry’s trade group, the Solar Energy Industries Association, declared victory. But SEIA president Rhone Resch complained in a statement that, “BLM has only resolved half the problem. They have yet to approve a single solar energy project. Expediting the permitting process is the next step in developing solar energy projects on federal lands.”

He’s right that the process – which is intertwined with California’s extensive environmental review of projects in that part of the Mojave – takes far too long. But developing a desert-wide environmental policy is absolutely essential for huge power plants that in total would cover hundreds of square miles of a fragile landscape home to protected wildlife and rare plants. Otherwise, watch each individual project get bogged down in endless environmental challenges.

What really threatens the nascent solar industry right now is not the BLM. Rather it’s the imminent expiration of the 30 percent investment tax credit that all these solar energy startups and their investors – which include companies such as Google (GOOG) and Morgan Stanley (MS) – are depending on make Big Solar economically viable. Congress has failed several times in recent months to extend the tax credit, which expires at the end of the year. If only solar energy execs and their supporters in Washington could exert the same influence on recalcitrant Republicans as they have on the BLM.

About Green Wombat

Green Wombat is written by
Todd Woody, a veteran environmental journalist based in California who writes for The New York Times, the Los Angeles Times, Grist and Yale e360. He's one of the few people on the planet who have held a northern hairy-nosed wombat in the wild.

Todd formerly was a senior editor at Fortune magazine, an assistant managing editor at Business 2.0 magazine and the business editor of the San Jose Mercury News.